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Domestic sales of brewery beverages remain stable – growth in waters

Domestic sales of brewery beverages remained stable in the January–September period of 2016. A total of 575.5 million litres of brewery beverages were sold. Domestic sales of beer, cider, long drinks, mineral waters and soft drinks rose by 5.4 million litres, or 0.9 per cent. These figures are based on sales statistics compiled by the members of the Federation of the Brewing and Soft Drinks Industry: Captol Invest, Hartwall, Olvi, Red Bull, Saimaan Juomatehdas and Sinebrychoff.

Restrictions on store opening hours were lifted at the beginning of the year, providing several extra hours for alcohol sales per week. There was also one more trading day in the first part of 2016 than in 2015. In spite of increased trading hours, sales of alcoholic beverages remained the same. Mineral waters comprised the only category to experience any significant growth.

The brewing industry is awaiting the amended Alcohol Act and its moderately progressive reforms. However, the industry is not satisfied with legal preparation in the Ministry of Social Affairs and Health.

“Preparations have been slow and there are surprising deficiencies in the proposal’s points of view with regard to trade and commerce. The brewing trade is one of many trades, and should fall within the administrative sector of the Ministry of Economic Affairs and Employment, not the Ministry of Social Affairs and Health,” says Elina Ussa, Managing Director of the Federation of the Brewing and Soft Drinks Industry.

The new Act will bring many small reforms, but will leave unsuccessful over-regulation in force.Questionable legislation governing alcohol advertising will remain, such as brand markings on delivery vehicles, social media restrictions, the complete ban on outdoor advertising, and stricter time restrictions on television commercials. The restriction on discounts will also remain, even though it has operated contrary to its intent, by increasing sales of multipacks and decreasing sales of single cans and bottles.

Crossborder trade must also be curbed with tax cuts

Travellers’ private imports of brewery beverages from abroad cannibalise domestic sales. According to a National Institute For Health and Welfare interview study, travellers’ private imports of beer, cider and long drinks rose by 15 per cent between September 2015 and August 2016.The last two tax hikes were directed at brewery beverages in particular: cider, long drinks and beer. This is the very reason why crossborder trade in brewery beverages has exploded. Alcohol taxation has not generated the additional revenue expected by the State, as the price difference has made it worthwhile for consumers to import beverages from Estonia.

The volume of alcohol imported by travellers, mainly from Estonia, equates to more than the sales of 190 Alko stores (from a total of 353 stores).This volume also equates to double the on-trade sales of the entire country. Quadruple the amount of beer, and almost treble the amount of long drinks, is imported compared to what is sold in Alko.

Finland’s high alcohol tax is the primary reason for considerable travellers’ imports of beverages. Finland’s beer tax is the highest in the EU. Latvia’s beer tax is one tenth of Finland’s, and Finns are even travelling all the way to Latvia in search of cheaper prices. Crossborder trade is not solely a Finnish phenomenon – it always occurs when there is a significant price difference between countries.

“Although Estonia has announced a planned tax increase for next year, the level will still fall far short of Finland’s. The only way we can curb crossborder trade is to implement a moderate cut in alcohol taxation. The Finnish brewing industry simply cannot afford to take any more tax hikes that fuel crossborder trade. It's a question of business opportunities and Finnish jobs,” says Ussa.

The Finnish brewing industry directly employs over 1,700 people in Finland.About a thousand jobs have been lost in the industry over the last ten years. The industry provides direct and indirect employment for about 26,000 people and generates over EUR 2 billion in tax revenue for the State every year.

Every year, Finland loses over EUR 300 million in alcohol tax revenue to crossborder trade – as well as the accompanying VAT on alcohol sales. A third of imported beverages are made in Finland.

Source: Member companies of the Federation of the Brewing and Soft Drinks Industry. The statistics do not include sales by actors outside the Federation nor private imports of brewery products, which are not statistically recorded. As of the beginning of 2011, the statistics include all the brands of the members of the Federation of the Brewing and Soft Drinks Industry and any private label brands they produce.

The Federation of the Brewing and Soft Drinks Industry promotes the interests of producers of beer, cider, long drinks, soft drinks and mineral waters in Finland. Its members are Captol Invest Oy, Oy Hartwall Ab, Olvi Oyj, Red Bull Finland Oy, Saimaan Juomatehdas, and Oy Sinebrychoff Ab. The Federation of the Brewing and Soft Drinks Industry operates in connection with the Finnish Food and Drink Industries Federation and represents Finland’s fourth largest industry in the food and drink branch in terms of the value of production.